Servant or Serf? Severance Pay on Transmission of Business and the Right to Choose an Employer.

By David Chin

The right of employees to choose for themselves whom they would serve has been described as the main difference between a servant and a serf.

However, the legislature, courts and industrial tribunals have demonstrated a reluctance to grant the benefits that accrue on redundancy to employees who, for all practical purposes, maintain continuous employment, albeit with a different employer. In particular, this reluctance has applied to redundancy or severance pay as a debt that is otherwise owed by an original employer on transmission of its business. This article advances the proposition that a prospective transfer of employment on transmission of business ought not to fetter the fundamental autonomy of employees in terms of their choice of employer. Such autonomy is potentially compromised by any requirement to accept employment with an alternative employer in order to preserve accrued rights to severance pay in circumstances where an employee's position with their original employer is none the less redundant.

Chin sums up "Given the prevalence of novel and innovative outsourcing arrangements and corporate restructures, and having regard to community concerns about employment insecurity, it might well be appropriate to reflect upon some of the underlying assumptions and internal tensions evident in the seminal authorities in this area of the law, including the termination, change redundancy case. As employees are increasingly told to relinquish supposedly outdated concepts of job security and to adapt to a rapidly changing and less secure economic life, closer consideration should perhaps be given to their fundamental rights, freedoms and autonomy. In particular, the elementary right to choose by whom one will be employed ought not to be lightly traversed. Any requirement to take up particular employment in order to preserve an accrued entitlement to severance pay is an encumbrance upon that right.

(Australian Journal of Labour Law. vol. 16, no. 2, September 2003)